Another player in the Israeli communications market - Hot Telecommunications Systems - is showing initial interest in acquiring the Walla! website, sources inform "Globes." Hot decided to examine the possibility of acquiring the website as part of a general review of the group's future in integrating content production with its infrastructure platform. Walla!'s value for an acquisition deal is estimated at NIS 60 million, less than a third of the Bezeq group's initial asking price when it put the website up for sale last year.
Walla!, one of Israel's leading news websites, generates high traffic. Hot sees it as important to distribute its content on other platforms, as it is currently doing in its cooperation with the Ynet website. The Altice group, controlled by Patrick Drahi, the controlling shareholder in Hot, also owns the i24 news channel, which produces news at relatively high costs. Merging the platforms could reduce these costs.
The Bezeq group's sale of Walla! is currently being handled by its chairperson, Shlomo Rodav. Among the parties previously mentioned as interested in the acquisition are Channel 13 and billionaire Leonid Nevzlin, who has holdings in the "Haaretz" group.
Despite its popularity, Walla! has posted heavy losses in recent years. Under CEO Ilan Yeshua, who resigned last month, Walla! lost NIS 44 million in 2018, including a NIS 37 million write-down of goodwill, fixed assets, intangible assets, and broadcasting rights. The website has accumulated over NIS 90 million in losses in the past three years.
A note on Walla! in Bezeq's financial statements for 2018 states, "Given the intensification of competition in the Internet advertising sector, Walla! has revised its forecasts for the coming years… The main assumption underlying the projection is that the high-intensity competition prevailing in sector will continue, and will affect mainly revenue. Operating, sales, and marketing sales expenses and investments have been adjusted to the company's volume of activity. Since the projected cash flow for 2019-2023 is negative, the use value is close to zero."
Despite Walla!'s heavy losses in 2018, the cost of Yeshua's salary was NIS 3.5 million - nearly NIS 300,000 a month. Yeshua became CEO of Walla! in November 2006, over 12 years ago. The cumulative cost of his salary during his term is nearly NIS 40 million, including a bonus on the successful sale of the Yad2 website to German company Axel Springer in 2014. Yeshua resigned last month and was replaced by Ido Eshed, who was previously Walla!'s SVP products and content.
Published by Globes, Israel business news - en.globes.co.il - on July 1, 2019
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